Serb smugglers make sport of West's embargo

'SERBS are well-known for their talent for smuggling,' remarked the shop assistant, sitting next to a glass cabinet filled with Bally shoes stamped 'Made in Switzerland'.

In the window, black platform clogs were on offer at 100 German marks (pounds 40) a pair. Next door, United Colors of Benetton displayed clothing familiar to any British high-street shopper; downstairs, a rival chain (DM200 for a pale blue cable-knit sweater) sported a large sticker on the door: 'Stefanel Authorized Dealer 1994'.

This Belgrade shopping complex, known as Arkan's arcade, because so many of the shops belong to the paramilitary leader and alleged war criminal, is home to one of the city's many 'duty-free' shops - all major brands of American cigarettes available.

The street outside is filled with taxis plying for trade, and cars - some of them brand-new BMWs and Mercedes - dodging the buses and trams. So much for the oil, arms and travel embargo on rump Yugoslavia.

On Sunday night, Nato warships in the Adriatic intercepted a Maltese-registered tanker carrying 47,000 tons of oil, heading for Montenegro. The alliance said no ships had beaten the blockade on the Yugoslav coast since its ships began patrolling in April 1993.

This week's edition of Nin, a Belgrade news magazine, told a different story, claiming that Montenegrin tugs, pulling barges, cross into Albanian waters five or six times a day, load up with oil, and return home to the port of Ulcinj. Another smuggling channel identified by Nin is Lake Skadar, the border between Albania and Montenegro.

Unlicensed dealers in Skadar are often robbed of their wares at the point of a Kalashnikov. But Nin interviewed one man who claimed to earn about DM2,000 a day smuggling fuel, despite having to split the money 30-70 with the state.

The price of petrol on the Albanian side, said Nin, is DM0.7 per litre; on the Montenegrin side it is DM1.3 per litre, to the bulk-buyer. In Belgrade, an ordinary punter can expect to pay DM3.06 for super or unleaded at a state-owned garage.

Fuel bought from freelancers, who stand beside the road selling petrol from jerrycans and even old Coca-Cola bottles, is often cheaper, but the quality is patchy. Taxi-drivers are entitled to 150 litres of petrol a month, bought from their own garage at DM1.3 a litre. 'This petrol comes from Nis (in southern Serbia) and the tankers bring in 16 tons a day,' said one cabbie. 'We don't know where it comes from - probably Bulgaria or Macedonia.'

Sanctions hurt the Serbs, but mainly because they worsen the economic down-turn created by war and mismanagement. 'We are getting less pocket money now,' said 13-year-old Jelena, out for a bike ride beside the Danube. 'I can't buy the sneakers I want - Nike AirMax 2.' But being short of cash is not the same as being short of consumer goods. 'You can see the good cars, the good clothes, good food - everything that's necessary for a modern society,' said Bane Parmakovic, a jazz musician. 'I'm just waiting for some equipment to arrive from London.'

Analysts in Belgrade say that while petty smuggling occurs with the collusion of police and customs officers, bribed to turn a blind eye to jerrycans filled with petrol, most of the big business is conducted as a joint venture between the state and organised crime.

'Sanctions-busting is large-scale and organised, with official participation from the top down,' said a diplomat. 'They are adept at exploiting any gaps.'

At the port in Belgrade yesterday, the big, blue cranes were standing idle, towering above two Czech barges loaded with thousands of sacks of potatoes. A few weeks ago, a Bulgarian ship, claiming it had been hijacked, docked and unloaded its cargo of oil under the very noses of Western diplomats in the city. There was nothing they could do. The hijack story draws gales of laughter from locals.

'Hijacking?' one cynic said. 'Yes, the first mate held the captain at gunpoint as they sailed past the Western observers, watching for sanctions-busting at the border.'